- Case Type:
- Case Status:
- 18-1148 (9th Circuit, Feb 11,2019) Not Published
- Chapter 7 discharge barred trustee of trustee from seeking to collect on debts owed to the trustee of an estate planning trust in his individual capacity, but did not prohibit the trustee, in his capacity as such, from administering the trust, paying himself and others for costs incurred in trust administration, and utilizing recoupment, if appropriate, in his division and distribution of trust assets.
- Procedural context:
- Bankruptcy court ruled on summary judgment motions in adversary proceeding and appeal to the Ninth Circuit BAP followed.
- This appeal involved on-going litigation between Richard Kvassay and Peter Kvassay, and their brother, Robert Kvassay. In 2007, Robert became trustee of the estate-planning trust established by their deceased parents. In that role, he oversaw liquidation of the trust’s assets (the “Property”). Disputes arose, followed by litigation. Robert ousted his two brothers from the Property and sold it for more than $5,000,000. The brothers’ litigation led to huge costs for the trust and for Robert, and claims by the trust against both Richard and Peter, who eventually filed bankruptcy and obtained chapter 7 discharges. Years later, Richard and Peter each filed an adversary proceeding seeking a determination that the debts they owed Robert, individually and as trustee, were discharged in their bankruptcies; they also sought an injunction prohibiting surcharge of their interests in the trust and declaratory relief so stating. On summary judgment motions filed by Peter and Richard, the bankruptcy court determined that the debts were discharged to the extent of their personal liability. On Robert’s summary judgment motions, the bankruptcy court clarified that the discharge injunction did not prohibit Robert, as trustee, from administering the trust, paying himself and others for costs incurred in trust administration, and utilizing recoupment, if appropriate, in his division and distribution of trust assets. On appeal, Richard and Peter raised non-meritorious preclusion and jurisdictional arguments and failed to argue that the bankruptcy court otherwise erred in granting Robert’s summary judgment motions. As a result, the Ninth Circuit BAP affirmed the bankruptcy court.
- Taylor, Faris, and Kurtz
Ricky Sharpton v. Susan Manchester, Chapter 7 Tr
Summarizing by Lars Fuller
3142 in the system
1 Being Processed